Developing an effective IP strategy
April 26, 2021
For many companies, their intellectual property (IP) portfolio is their largest asset. IP consists of many different areas, including company logos and corporate identity, as well as services, and products or processes, that together set apart a business offering from a competitor. While nearly all companies have benefitted from use of the internet to enable their products and marketing communications to reach the public worldwide, this has also been accompanied by an increased risk of IP theft, making protection of IP more important than ever.
The value of IP
A patent is an IP right for a technical invention, and requires the publication of the invention, thereby stimulating R&D, in return for a 20-year monopoly. This monopoly right enables the owner of the patent to prevent others from using the invention for commercial purposes during this period, thereby providing the owner with an opportunity to recover costs and seek a return of investment. How is this monetized?
A company can extract value from patents in many different ways. For example, having patent protection early within a given field, enables the owner to manoeuvre their way through the field relatively freely. This provides the company with a greater reassurance that they will not find themselves in a positon of requiring a licence from a third party. Patent protection may also provide a company with licensing opportunities, which could provide a revenue stream for products or processes not practiced by the company.
Patents increase overall corporate value – in 2020, the tangible assets of Fortune 500 companies accounted for only 10% of the companies’ enterprise value, whereas intangible assets including IP accounted for 90%. Finally, a broad patent portfolio can provide a defensive arm to a company’s IP strategy, providing protection for the company from any future patent infringement suits.
Managing your IP strategy
While there are many benefits to consider, patent protection is a costly and lengthy process. An important first step is to put in place a clear and directed IP filing strategy. Patent applications should not be filed for every patentable invention, but instead resources should be focussed on obtaining and maintaining patent protection for inventions that will bring sufficient commercial or strategic benefits.
The filing of the patent application is only one of the many stages along the way where fees will be accrued. Obtaining broad international protection may seem like the best solution, but the added costs may not outweigh the benefits in certain countries. Also be aware that patent laws vary from country to country, and so while strong protection may be obtained in one country, protection elsewhere may be less certain.
It’s worth noting that not every invention or patent filing is going to end up being relevant to the business strategy. Even after a patent has been granted, it’s worth evaluating periodically whether costs savings may be made on abandonment or sale and redirecting funds to protect more currently relevant technology. Even such abandoned patents play an important role within the patent process. These abandoned patents remain ‘prior art’ within the field and prevent the issuance of broader patent rights to later applicants.
An effective IP strategy relies on the periodic review of the commercial importance of the invention throughout the life of the patent to ensure maximum value extraction. World Intellectual Property Day 2021 shines a light on the critical role of SMEs and how they can use IP rights to build stronger, more competitive and resilient businesses.